Business Times

Pension scheme discussion on Tuesday

Employers and workers discuss logistics of budget proposal

A new pension scheme approved in last month’s budget has raised concerns amongst employers and workers over its implementation impact and will be the subject of discussion at Tuesday’s National Labour Advisory Council (NLAC) meeting.

The NLAC brings together Labour Ministry officials, employers and workers in a collective effort to find a consensus on labour reforms. “All labour reforms traditionally get the advice of the council and at the last meeting we had decided that an initial proposal for a pension scheme should be the subject of a further study to ascertain its impact. However without further consultation with the council, the government announces this in the budget,” said trade union leader Anton Marcus from a union representating garment workers.

Some employers also said they were concerned about the impact but declined to comment further. Asked to comment, Employers Federation of Ceylon (EFC) Director-General Ravi Peiris said they hoped a committee would be appointed to look into the impact of such a pension scheme on millions of workers and employers.

“We have been assured by the Labour Ministry Secretary that the contribution will be from what is already being contributed to the Employers Provident Fund (EPF) by employers and workers. There won’t be any new payment required,” he told the Business Times.

In the budget, President Mahinda Rajapaksa announced that the pension fund will involve a 2 % contribution from employees and 2 % contribution from employers. “The employers will be required to transfer the entirety of the gratuity payment to this fund. Employees too will be required to transfer 2 % of their Pension Fund balance at the time they withdraw the Pension Fund, in lieu of future pension benefits from the Employees’ Pension Fund,” the President said.

Central Bank Governor Ajit Nivard Cabraal told the Business Times, a week after the budget, that the rationale for new Employees Pension Fund is because often members use up the money quickly (on retirement) and this source of income dries up. “Now there is another fund to fall back on in the form of a monthly pension,” Mr Cabraal said.

Whole the employers and workers are together in their concerns over the new pension scheme, both sides are flexing their muscles over a proposal by employers to implement a 5-day work week instead of a 5 ½-day week.

Unionists like Mr Marcus says this proposal needs more discussion before any decisions are taken.
In a November 10 letter to Labour Minister Gamini Lokuge, the EFC said some of the compelling reasons for a 5-day week with a spread over of the ‘5 hours from Monday to Friday; is the reduction in fuel costs and other expenses related to factory operations, and also taking into account convenience of employees who will have an additional day off on account of it.

“… on behalf of our membership and employers in Sri Lanka, especially in the manufacturing sectors, we would urge you to consider this matter seriously and make necessary arrangements to provide for such a working arrangement whenever it is required by an employer. We wish to reiterate once again that such a working arrangement falls clearly within what is contemplated in article 2(b) of ILO Convention 1 on Hours of Work,” the letter said.

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